August 1, 2019 / 1:37 PM / a year ago

MIDEAST STOCKS-Gulf shares dip as Fed hints no further rate cuts

    * Most Saudi banks fall, Samba plunges to lowest in eight months
    * Abu Dhabi suffers biggest one-day loss in over two months
    * Lender COMI boosts Egyptian market

    By Shakeel Ahmad and Maqsood alam
    Aug 1 (Reuters) - Major Gulf stock markets fell on Thursday after the U.S.
Federal Reserve cut interest rates by 25 basis points but, significantly,
signalled the move may not mark the beginning of a long easing cycle.
    Markets had been looking for the Fed to signal more cuts were coming.
    Central banks in Saudi Arabia, the United Arab Emirates and Qatar followed
the move, cutting their rates by the same degree. Their currencies are pegged to
the U.S. dollar and they follow the Fed on interest rate moves.
    Banking shares were hard hit as the rate cuts are expected to take a toll on
their margins.
    Saudi's index was down 0.8%, with Samba Financial Group
slumping 4.3% to its lowest level since Jan. 2, after it became the first lender
to report a fall in second-quarter profit, which dived nearly 25% as operating
expenses mounted.  
    Al Rajhi Bank, which earlier gained on robust earnings, fell 1.7%.
    Analysts expect rate cuts to hurt the margins of Saudi banks, which made
record profits of around 50 billion riyals ($13.3 bln) in 2018 following several
interest hikes over the past few years.
    Elsewhere Saudi's biggest petrochemical maker Saudi Basic Industries Co
 was down 0.9% after earlier this week reporting its lowest quarterly
profit since late 2009.
    In Abu Dhabi, the index dropped 1.7% in its biggest single-day loss
since mid-May, dragged down by a 1.8% fall in the market heavyweight First Abu
Dhabi Bank, and a 1% fall in Abu Dhabi Commercial Bank.
    ADCB earlier this week reported an 11% drop in second-quarter profit in its
first combined pro-forma financials after it merged with Union National Bank and
Al Hilal Bank earlier this year.
    Qatar's index was down 1% as the Gulf's biggest lender Qatar National
Bank shed 1% and Qatar Islamic Bank lost 2%.
    Dubai's index was fell 0.6%, with Emirates NBD Bank
slipping 0.4%.
    Property shares dragged the index the most. Blue-chip developer Emaar
Properties traded 1.5% lower after surging in recent sessions
following a large deal in China.
    Outside the Gulf, Egypt's blue-chip index defied the downward trend
 and closed 0.9% higher. Its largest lender Commercial International Bank
 acted as the biggest boost for the index, rising 2.3%. 

 SAUDI       The index         was down 0.8% to 8,666 points
 ABU DHABI   The index        lost 1.7 % to 5,230 points
 DUBAI       The index          fell 0.6% to 2,900 points
 QATAR       The index        dropped 1% to 10,398 points
 EGYPT       The index          rose 0.9% to 13,526 points
 BAHRAIN     The index        was up 0.1% to 1,550 points
 OMAN        The index        was up 0.4% to 3,777 points
 KUWAIT      The index        edged up 0.1% to 6,754 points

 (Reporting by Shakeel Ahmad in Bengaluru
Editing by David Holmes)
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